Danone considers options for Lifeway after withdrawing takeover interest

Danone has reconsidered its interest in acquiring Lifeway Foods, a US-based kefir maker, and is now exploring other investments in the company.

Last month, an agreement was signed between Danone and Lifeway to allow Danone to reconsider its bid for Lifeway after two previous offers were declined.

Danone has decided not to make another bid for Lifeway and is instead considering selling all or part of its 22.7% stake in the company.

In response to Danone’s decision, Lifeway issued a statement affirming its commitment to driving value for shareholders by executing its strategic plan and exploring value-enhancing opportunities.

The company has established a strategic review committee made up of independent directors to oversee the process and has engaged extensively with Danone throughout this process.

The initial proposal made by Danone to acquire Lifeway in September 2024 was for $25 per share, which was later raised to $27 per share. However, both offers were rejected by Lifeway, with the company claiming they undervalued Lifeway.

Tensions between Danone and Lifeway escalated, leading to a lawsuit filed by Danone accusing Lifeway of breaching a shareholder agreement. Lifeway responded by characterizing Danone’s offers as a “hostile takeover.”

Additionally, a family dispute within Lifeway has intensified, with the company’s chair and CEO, Julie Smolyansky, facing opposition from her mother and brother, Ludmila and Edward Smolyansky.

In July, the mother-and-son duo submitted a statement to the SEC seeking to replace Lifeway’s board, including Julie, with nominees focused on restoring accountability, transparency, and long-term shareholder value.

Danone is now considering whether to support the consent solicitation to replace Lifeway’s entire board.

Lifeway is known for its kefir products but also produces cheeses and a ProBugs line for children. The company’s dairy products are distributed in several countries, including the US, Mexico, Ireland, South Africa, France, and the UAE.

During the second quarter of the year, Lifeway reported net sales of $53.9 million, a year-over-year increase of 18% on a comparable basis. In the first two months of the third quarter, Lifeway saw a 20% growth in unaudited net sales, totaling $39.1 million.

In conclusion, Danone has decided not to pursue an acquisition of Lifeway Foods and is now considering other options related to its investment in the company. The relationship between the two companies and the ongoing family dispute within Lifeway continue to shape the future of this situation.